2019 (2) TMI 1018 - HC - VAT and Sales Tax

Deduction of taxable turnover referring to Sections 3, 4 and 5 of the Central Sales Tax Act - the opposite party dealer is neither agent nor middleman of Ex-U.P. Vendor but has himself purchased the goods from outside State of U.P. in his own account and has used in execution of work contract - exemption against the provision of Section 3(3) of U.P. Value Added Tax Act, 2008 read with Rule 9(10(e) of the U.P. Value Added Tax Rues - Held that - Issue stands decided in the case of M/S COMFORT SYSTEMS VERSUS COMMISSIONER COMMERCIAL TAX, U.P. 2019 (2) TMI 924 - ALLAHABAD HIGH COURT , where it was held that Since in the present case, the Tribunal recorded a specific finding that there pre-existed works contracts between the assessee and the contractees and further the assessee had purchased the goods from outside the State of U.P., only to execute those pre-existing works contracts, in absence of any further finding that such goods had been sourced from before or that they were not applied to the works contract or that there arose two sales, the assessee was clearly entitled to the benefit of deduction contemplated under Rule 9(1)(e) of the Rules. The questions of law framed in the present revision is answered in affirmative i.e., in favour of the assessee and against the revenue - revision dismissed.

Summary

Issues:
1. Delay condonation application
2. Questions of law framed by Commercial Tax Tribunal
3. Challenge to the judgment and order passed by the Tribunal
4. Assessment Year 2011-12
5. Tax liability reduction
6. Interpretation of Rule 9(10)(e) of U.P. Value Added Tax Rules
7. Deemed sale in the course of inter-state trade
8. Movement of goods in works contract
9. Categorical finding by the Tribunal
10. Judgment reference in support of arguments
11. Settlement of controversy

The judgment addresses a delay condonation application for a revision, allowing it due to sufficient cause and lack of opposition. The revision under Section 58 of the U.P. Value Added Tax Act, 2008 challenges the Tribunal's order for the Assessment Year 2011-12. The respondent-assessee, a work contract dealer, faced a tax levy of ?48,33,974, reduced in first appeal and further in second appeal by the Commercial Tax Tribunal. The questions of law framed by the Tribunal revolve around the deduction of taxable turnover and exemption against U.P. Value Added Tax Act provisions.

The judgment delves into the interpretation of Rule 9(10)(e) of U.P. Value Added Tax Rules concerning deemed sale in the course of inter-state trade. The Court analyzed a previous judgment emphasizing that the movement of goods in a works contract need not be directly linked to the contractee for claiming deductions. The Tribunal's failure to explicitly state the connection between goods movement and the works contract was highlighted, with one party arguing the necessity of such a finding for eligibility.

The Court considered arguments from both sides regarding the movement of goods in relation to the works contract and the applicability of the Rule. It referenced a judgment emphasizing that the movement of goods due to a pre-existing works contract suffices for claiming deductions. Ultimately, the Court dismissed the revision, favoring the assessee based on settled controversies and the interpretation of Rule 9(10)(e) in line with previous judgments. The judgment did not award costs to either party.